A.D. Vision, RIP? (update 7)

Edit: After discussions with Omo, linked in the above article, I saw his point and decided a “?” should be appended to the headline.

I noticed a reference to Sgt. Frog being licensed by Funi, and remembered that it used to be ADV. “Hmmm. I wonder how ADV is doing…I haven’t heard anything in months…”

I’ll summarize: ADV is dead. (Update: sort of). It’s sold off (most if not) all of its assets and business. This is currently the entirety of its front page, dated today.

Press release:

FOR IMMEDIATE RELEASE

A.D.VISION, INC. CONCLUDES SERIES OF ASSET TRANSACTIONS

HOUSTON, September 1, 2009 â€” A.D. VISION, INC. (“ADV” or the “Company”) announced today that June 1, 2009, the Company concluded a series of transactions that are expected to result in seamless delivery of home video products and television programming to customers.

Through an asset purchase agreement, AEsir Holdings, LLC (“Aesir”) acquired a subordinated interest in selected programming from ADV’s film library together with other intellectual property subject to all liens and security interests of the Company’s senior secured lender. The transaction requires Aesir to assume specific obligations and scheduled liabilities of the Company under legacy license agreements associated with the acquired programming.

Concurrently, the Company concluded an asset purchase agreement with SXION 23, LLC, doing business as “Section23 Films,” a home video distribution company, under which it assumes account servicing and distribution operations in connection with the library acquired by Aesir, subject to all liens and security interest of the Company’s senior secured lender.

John Ledford, ADV’s President and CEO, states “We believe the actions we initiated and completed provided the same or more value to the Company’s secured lender and its programming licensors while giving other key stakeholders such as employees and customers some potential value or the reasonable probability of realizing value.”

In a separate transaction, Valkyrie Media Partners, LLC (“Valkyrie”) acquired a 100% equity position in Anime Network, Inc. (“ANI”), formerly ADV’s television unit, pursuant to a stock purchase agreement between ADV and Valkyrie. That transaction includes an assumption by Valkyrie of specific liens and security interests of the Company’s senior secured lender.

Further announcements are expected from the respective acquiring entities over the coming days.

Update: I immediately went to ANN to check it out; they had the following additional information:

Former ADV Films staffer Chris Oarr has notified ANN that several former staffers have been hired by SXION 23 and the other companies.

Update: All of the new companies are officially based in Houston, the home of A.D. Vision. SXION 23’s business filing was dated on May 20, while AEsir Holdings, Valkyrie Media Partners, and Seraphim Studios were filed eight days later on May 28. SXION 23, Valkyrie Media Partners, and Seraphim Studios share the same address in western Houston, 8 miles (13 kilometers) from A.D. Vision. Sentai Filmworks, another business entity for which A.D. Vision and Amusement Park Media handled distribution and production, is also located in western Houston.

Looks like they may have created some shell companies and broken up the assets, or some of the management broke off and made an outside bid to effectively take over the company. Without some idea of the sale terms, I can’t say if they’ve spun off their assets to avoid their liabilities (I doubt it was entirely successful, given the reference to superior lienholders), or if this is a way of getting the non-performing assets (the TV network) out of the way of their poorly performing assets (the abysmal library they have remaining).

Update 2: The more I look into this, the more it appears that a shell game of sorts is exactly what happened here. They’ve restructured by handing the company’s assets off to new entities composed partly of the same people and partly of some new investors (I think…still trying to figure out who).

Update 3: ANN comes through —

Update 2: SXION 23, Valkyrie Media Partners, and Seraphim Studio are filed under Griffin D. Vance IV’s name. Griffin Vance was A.D. Vision’s former Senior Vice-President of Business and Legal Affairs, but he now operates his own law practice. Vance’s law firm shares the same postal address as SXION 23, Valkyrie Media Partners, and Seraphim Studio.

Dollars to donuts, after leaving the company, he raised some funds and has now returned to, in effect, do it his way.

Update 4: from the RACS blog (emphasis added):

Just got off the phone with Mike Baliff, formerly of ADV Films who is now heading up Sales and Marketing at the new company Section 23 Films. Section 23 has acquired all of ADV’s former licenses and most of the staff (including Chris Oarr, Destiny, Michelle, everyone formerly at ADV that mattered), and is picking up publication and distribution of all former ADV titles, (snip)I also think it’s worth mentioning that John Ledford is not part of the new company. Thanks very much to Mike for calling me personally to walk us through the changeover. Mike and I go back a long way, maybe 10 or 11 years, and I feel like ADV’s former licences could not have fallen into better hands.

So obviously, Vance set up shop in May and started negotiating terms; it took most of 3 months to iron it all out.

Update 5: or maybe not, as someone pointed out that he could be doing it on behalf of Ledford. However, ANN posts that Sojitz still had its 20% stake in ADV. I’m a bit leery of that; the early fire sale struck me as a way to raise money to pay them off. But if they couldn’t do that, then the next best way to get rid of Sojitz would be to move all the assets and leave ADV as an empty husk.

Update 6: Re-reading the original message there’s something I forgot about. We keep seeing variations of the same words over and over: “Subject to all liens and security interest of the Company’s senior secured lender.” This senior secured lender is never identified in the press release. What an odd omission…

Sojitz? A bank? Another animation company? In any case, it’s obvious that while the assets have been transferred, so have certain liabilities. Sojitz may or may not own 20% of nothing now, but as long as it still has senior liens on the remaining assets, the likelihood of them filing a suit is low.

If it comes down to a contest between domestic lienholders and a foreign minority shareholder that’s making it too difficult to get new financing, Sojitz won’t win, especially if it ends up in a bankruptcy court. Ledford has legal options to make it very painful for Sojitz. In fact, I half expect a bankruptcy announcement now. As long as the domestic creditors are happy, Sojitz is probably up the creek. Edit: but see update 6.